RICS: Agency stock rises to three-year high but sales are facing short-term slump

Agency stock has hit a three-year high but sales expectations have dipped as hopes of an imminent interest rate cut fade, research suggests.

The latest Royal Institution of Chartered Surveyors' (RICS) UK Residential Survey results for April 2024 suggest the recent recovery in buyer demand has mellowed, with the market seeming to have been impacted by the slight increase in mortgage rates over the past few weeks.

Average stock levels have now picked up to a three-year high, at 43 properties per branch, RICS said.

The headline figure for new buyer enquiries, in terms of net balance, dropped from +6 to -1 in April, marking the end of three consecutive positive monthly results, indicating a more stagnant market this time round. The regional feedback on buyer demand is mixed, with a notable loss of momentum mainly seen in London and Southern parts of England.

Looking at the number of properties available on the market, a net balance of +23 of respondents noted an increase in new instructions during April - the most positive figure since September 2020.

The agreed sales indicator also improved slightly in April, with a net balance reading of +5 compared to -5 last month. Although this marks the most positive reading since May 2021, it only shows a minimal increase in monthly sales.

However, the net balance for sales expectations over the next three months dropped to -1, the lowest since October 2023 which RICS said suggests a stagnant near-term outlook.

Respondents remain optimistic about a stronger trend in sales activity over the next 12 months, although they expect it to be slightly less robust with a net balance of +33 recorded this time, down from +46 last month.

Simon Rubinsohn, chief economist at RICS, said: “Feedback to the latest RICS survey demonstrates the sensitivity of the sales market to interest rates at the present time, given the continuing challenge around affordability.

“A modest back up in mortgage pricing has contributed to the flatlining in the buyer enquiries metric over the past month, as well as the slightly more cautious signals around near-term expectations.

“That said, there is still a strong perception that activity in the market will pick up in the latter part of the year and into 2025, irrespective of any political uncertainty around the General Election.”